TCS up after results; HSBC, CLSA upgrade ratings

MUMBAI

Logos of Tata Consultancy Services (TCS) are displayed at the venue of the annual general meeting of the software services provider in Mumbai, June 29, 2012.

Reuters/Vivek Prakash/Files

MUMBAI (Reuters) - India's largest software services exporter Tata Consultancy Services (TCS) gained the most in more than eight months in Mumbai trading after posting better-than-expected earnings and prompting a raft of analyst upgrades.

HSBC upgraded TCS to "overweight" from "neutral," and "modestly" increased its profit outlook for the year ending March 2014 by 2 percentage points, citing improving margins and an expected rise in demand.

CLSA described the quarterly earnings as "picture perfect" and upgraded the stock to "outperform" from "sell."

TCS reported on Monday a 23 percent rise in quarterly profit from a year earlier and reiterated it should beat a closely watched industry growth forecast.

Its shares advanced as much as 4.9 percent on Tuesday, the most since April 24 last year, and were up 2.1 percent as of 11:51 a.m.

Infosys posted a 4.2 percent gain in revenue for the quarter ended December compared with the previous three months.

The mixed analyst reaction to TCS came after the software services exporter consistently topped estimates with its earnings last year.

Other analysts reiterated their bullish calls on TCS, with brokerage Jefferies maintaining a "buy" rating.

"TCS has delivered quarter after quarter, justifying premium valuations over peers. Our view has been that 2013 is likely to be a better year for Indian IT as far as demand is concerned," Jefferies wrote in a note.

Shares in Infosys fell 0.4 percent after surging 21 percent since Friday when the company announced its third-quarter earnings.

(Reporting by Rafael Nam and Abhishek Vishnoi; Editing by Ryan Woo)

Trending On Reuters

Markets

The BSE Sensex posted its worst monthly fall in more than two years, raising concerns a strong rally that saw indexes surge in the fiscal year was waning due to concerns about stock valuations and a more gradual economic growth. Full Article